Flexible retirement guidance for employers

Flexible retirement allows members to ease into retirement by accessing their LGPS pension while continuing to work on reduced hours or in a lower‑graded role.

Employees can only take flexible retirement with employer consent and must:

• be 55 or over (changing to 57 in April 2028)
• have at least two years' LGPS membership

For employers, flexible retirement is a discretionary provision. As an employer, you must:

• maintain a written policy outlining how you exercise this discretion
• ensure you make decisions consistently but with consideration of individual circumstances

We have written some guidelines for writing a good flexible retirement policy (below).

Your responsibilities

Maintain and apply a flexible retirement policy

LGPS regulations require you to publish a clear policy on how you will exercise the discretion. Your policy must support consistent decision‑making while allowing consideration of personal factors such as:

• health
• caring responsibilities
• service needs

Consider each application on its merits

There is no automatic right to flexible retirement. You must make decisions case by case, considering:

• operational impact
• service continuity
• potential costs
• succession planning
• whether the requested reduction in hours or grade is workable

Rejecting all requests solely on cost constitutes improper 'fettering of discretion' under pensions law.

Assess cost implications

If you receive an application, you should request a pension estimate from us to confirm any strain cost. You may choose to waive actuarial reductions, depending on internal policy, though many employers do not.

Notify us

If you approve flexible retirement, you must formally notify us after the member reduces hours or grade.

We will then:

• process retirement benefits
• issue retirement paperwork directly to the employee

Manage ongoing employment and pension contributions

Unless they opt out, members on flexible retirement normally continue paying LGPS contributions and build up a new pension account.

How to write a good flexible retirement policy

Best practice would be to include the following in your policy:

• a definition of what constitutes a reduction in hours or grade (for example 20%, 25%, 30% reduction, or one or two grades down)
• whether the reduction must be permanent or contractual
• whether the member can increase their hours or grade again after a period, and define the minimum term
• whether you waive actuarial reductions, and if so, under what circumstances
• whether you will switch on the 85‑year rule, and under what circumstances
• whether you will allow partial drawdown of benefits

Defining 'case by case'

If you use the term 'case by case', best practice is to define what that means. Factors you might consider include:

• health issues
• caring responsibilities
• operational needs
• potential cost savings

Avoid a vague policy

Although it is important to allow case‑by‑case discretion, it is essential not to make discriminatory or arbitrary decisions. A vague policy could lead to inconsistent application, which could result in appeals or complaints.

Your new flexible retirement policy

You must send us a copy of your flexible retirement policy (this applies to all mandatory discretions).

If you decide to amend the policy, you must send us a copy within one month of the decision to amend.

No change can take effect until one month has passed since the date you published the amended policy statement.